Which term describes the difference between assets and liabilities?

The term that describes the difference between assets and liabilities is owners equity. Owners equity, often referred to as net worth, is a crucial concept in accounting and finance, representing the amount of ownership in the assets of a business after subtracting its liabilities. Essentially, it shows what is left for the owners once all debts have been paid, making it a key indicator of financial health.

In the context of a balance sheet, assets and liabilities are presented clearly, and owners equity gives a snapshot of the residual interest in the assets after all obligations have been met. Knowing this is fundamental for accounting, as it helps stakeholders understand the financial position of a business.

The other terms listed do not accurately describe the difference between assets and liabilities. The balance sheet is the document that presents assets, liabilities, and owners equity; current liability refers specifically to short-term obligations a company must pay within a year; and trial balance is an internal report used to ensure that total debits equal total credits. None of these terms encapsulate the concept of the difference between assets and liabilities as succinctly as owners equity does.